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Homebuyer's Financial Worksheet

The homebuying process requires a significant financial investment. This worksheet can help you understand how much you should save for a down payment and closing costs.

While this worksheet gives you an idea of what you can afford, a mortgage lender can provide a more precise estimate. This worksheet is not a substitute for professional advice.

Understanding the Homebuying Process

While saving for a new home is essential, it is equally important to understand why you are saving. There are many factors to consider as you save for this home. Budgeting for some of these items is important, as they are part of your upfront costs.

Credit Score

If you need a home loan, get a copy of your credit score ahead of time so that you know what to expect. Your credit score can impact your ability to get a mortgage loan. The lender could either deny your application or assign a higher interest rate. You can get a free copy of your credit report yearly from the three major credit reporting agencies: Equifax, TransUnion, and Experian.

Credit Report

Carefully review your credit report. If it contains any errors, contact the credit agency immediately to begin the dispute process. If your credit is less than stellar, and you have the time, take care of any adverse entries. Improving your credit can make a big difference when it comes to financing a home.

Upfront Costs

The price of the home is only one part of your total upfront costs. Many people get a mortgage loan to finance home purchases. Before looking at homes, you may need preapproval from a mortgage lender.

Many real estate agents need a preapproval letter before they show you homes for sale. The letter shows you are serious about buying a home. It also indicates that you have enough money to follow through with a purchase. The loan amount will dictate the price range of homes the Realtor or real estate agent will show you.

Lenders may look at the following factors before they approve or deny your loan application:

  • Credit score
  • Proof of income
  • Employment verification
  • Proof of assets, including bank account statements

Closing Costs

If this is your first home purchase, don't forget about the closing costs associated with the process. The home inspection is one such cost. Many other costs relate to mortgages.

Closing costs are usually a percentage of the purchase price. These costs include mortgage insurance, which protects the lender if the homeowner stops making monthly mortgage payments.

Mortgage Insurance

The cost of mortgage insurance depends on the loan type the borrower has chosen. For conventional loans, lenders often require private mortgage insurance (PMI). Borrowers who choose a loan backed by a federal agency, such as the U.S. Department of Agriculture (USDA) or the Federal Housing Administration (FHA), do not have to get PMI. Borrowers pay mortgage insurance directly to these agencies.

The Down Payment

The down payment is an integral aspect of the homebuying process. A down payment is usually considered the first payment on a home. It reduces the mortgage and allows the borrower to gain some equity. Borrowers who can't afford a hefty down payment should consider an assistance program that helps prospective homebuyers with their down payments.

Some states, like Maryland, offer down payment assistance programs. The federal government offers assistance through Downpayment Toward Equity Act grants. Although the legislation was pending as of 2023, qualified homebuyers would be able to seek a grant of up to $25,000 for their down payment toward a home.

Savings Chart

This chart is helpful if you are buying a house. It helps you evaluate home affordability or how much home you can buy.

Monthly Income

Your monthly take-home pay $_________________
Your spouse's or partner's monthly take-home pay $_________________
Money from other sources of income $_________________
Total monthly income $_________________

Monthly Bills and Expenses

Spousal or child support obligations $_________________
Monthly rent $_________________
Monthly car payment(s) $_________________
Student loan payment(s) $_________________
Credit card payments $_________________
Electricity $_________________
Natural gas $_________________
Phone service $_________________
Internet service $_________________
Cable/satellite/streaming service(s) $_________________
Water and sewer service $_________________
Health insurance $_________________
Auto insurance $_________________
Renter's insurance $_________________
Groceries and household supplies $_________________
Fuel and car repairs $_________________
Clothing $_________________
Health club dues $_________________
Other fees or dues $_________________
Entertainment/dining out $_________________
Incidental purchases $_________________
Total monthly expenses $_________________

Calculate Leftover Monies

Enter total monthly income as calculated above $_________________
Enter total monthly expenses as calculated above - $________________
Total (income minus expenses) $_________________

The total is the amount you could be saving each month.

Savings Tips

Many people have to save for their down payment. The following is a list of tips to help you save for your down payment:

  • Set a monthly budget, and stick to it.
  • Set up a special account for your house money. Many banks offer accounts for special savings goals. Money market accounts are a robust alternative choice.
  • If you have a checking account, you can make automatic deposits to your savings account from your checking account each month.
  • When you pay your bills, write a check to yourself first, and send it to your savings account.

How Much Money Can You Save and Borrow?

Your down payment savings must cover items beyond a percentage of the sales price. Homebuyers should be prepared to cover additional fees such as a loan origination fee.

Estimate closing costs by multiplying your estimated loan by 3% and then by 6%, to cover the typical low and high end of the costs' range. This gives you a rough idea of how much it may cost to complete your purchase.

$_______________ x 0.03 = $_______________

$_______________ x 0.06 = $_______________

Mortgage lenders frequently charge a loan origination fee to pay for their service to you. They may pay a percentage of the loan from the mortgage. To estimate this fee, multiply the amount you'd like to borrow by 5% and also by 1%.

$_______________ x 0.05 = $_______________

$_______________ x 0.01 = $_______________

Different kinds of mortgages require different down payments. The more money you have to put down, the more advantageous terms you can get for your mortgage contract. Lenders are also willing to sell you a mortgage with a low down payment. To understand your possible down payment, multiply the amount you'd like to borrow by 10% and 20%.

$_______________ x 0.10 = $_______________

$_______________ x 0.20 = $_______________

Calculate How Much Money You Need To Save

For 10% down, you must save between the high and low amounts indicated below.

10% down payment (enter it twice) $_______________ $_______________
Low and high estimates of closing costs $_______________ (low end) $_______________ (high end)
Low and high estimates of loan origination fees $_______________ (low end) $_______________ (high end)
Total needed to save $_______________ (low end) $_______________ (high end)

You must save between the following amounts if you'd like to pay 20% down (which may give you the most attractive terms).

20% down payment (enter it twice) $_______________ $_______________
Low and high estimates of closing costs $_______________ (low end) $_______________ (high end)
Low and high estimates of loan origination fees $_______________ (low end) $_______________ (high end)
Total needed to save $_______________ (low end) $_______________ (high end)

Calculate Monthly Housing Costs

It is essential to understand your total monthly housing costs. Lenders will use these current costs to determine how much house you can afford and the type of mortgage to offer you.

Monthly income before taxes $_________________
Spouse's/partner's monthly income before taxes $_________________
Gross monthly income (total) $_________________

Now, add up how much you currently pay each month for the following:

Rent/mortgage $_________________
Renter's or homeowner's insurance $_________________
Property taxes $_________________
Homeowners association fees $_________________
Electricity $_________________
Natural gas $_________________
Water and sewer service $_________________
Total monthly housing costs $_________________


Mortgage lenders use certain ratios to determine what they think you can afford to pay each month and calculate what dollar amount they will lend you.

The total dollar amount depends on the size of your down payment, what kind of mortgage you qualify for, and other factors.

Housing Expense Ratio

After deciding where you would like to live and investigating typical property taxes and homeowner's insurance for that area, calculate your total housing cost again. Your real estate agent can help you find this information.

Multiply your gross monthly income by 28%.

$____________________ x 0.28 = $____________________

This is your housing expense ratio.

Monthly Debt-to-Income Ratio

First, calculate your monthly debt.

Monthly housing costs $_________________
Auto loans or leases $_________________
Student loan payments $_________________
Credit card minimum payments $_________________
Child support/alimony payments $_________________
Other monthly debt payments $_________________
Total monthly debt $_________________

Divide your monthly debt by your monthly income.

$____________________ / $____________________ = ____________________

This figure is your monthly debt-to-income ratio.

Get Help

The path to homeownership is complex, especially for first-time homebuyers. An experienced local real estate attorney can help you navigate complex laws. Speak to a real estate lawyer today for legal advice tailored to your situation.

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